Depriciation ?

Why depriciation is an indrect exp and charged to profit/loss a/c?
Replies (4)

In simple words, Profit and Loss contains only those expenses which are NOT directly attributable to the main business activity of an enterprise/firm. 

Depreciation is charged on wear and tear of Fixed Assets and cannot be directly charged to the products and services.

So, it is NOT a Direct expense and hence comes in the Profit and Loss A/c.

In case of manufacturing concerns depreciation relating to plant& machinery used in the factory is charged to the manufacturing account as the loss is incurred directly in relation to manufacture of the goods from which the concern earns direct income. 

But for other assets used in the office of the manufacturer or say in case of a trading concern having assets like cars, computers etc.. the depreciation is not incurred directly in relation to the direct income earned by the concern.  But since it is used in the business of the concern it is shown as an indirect expense.

Thank u disha n giri
As explained by Giridhar,Depreciation can be classified as direct expense if it's of asset which are directly used in manufecaturing or trading activity.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
19 September 2026
CA/Semi-CA/BCom

Pravin Sarvaiya

Mumbai

CA Inter

View Details
Company
13 October 2026
Accountant

Zerdi & Co. Chartered Accountants

Pune

B.Com

View Details
Company
10 October 2026
Accounts Associate Level 1

Abic and Mani Chartered Accountants

Kottayam

B.Com

View Details
Company
Featured 21 September 2026
Consultant - Reporting

Finrep Advisors LLP

Mumbai

CA

View Details
Company
30 September 2026
Senior Accountant

Codeboard Technology

Chennai

B.Com

View Details
Company
19 September 2026
Finance Manager

Mugdha Art Studio

Hyderabad

CA

View Details
Company
14 October 2026
GST & TDS ASSISTANT

AGGARWAL SANJAY & ASSOCIATES

New Delhi

B.Com

View Details
Company
07 October 2026
Senior Account Manager

Amplio Invest

Mumbai

M.Com

View Details